Magazine article Journal of Banking and Financial Services

How Reliable Is Customer Research? Are Bank Customers Deliriously Satisfied or Seething with Resentment? It All Depends on What Research You Read. Elizabeth Duncan Argues the Case for More Rigorous and Transparent Research Methods. (Customer Satisfaction)

Magazine article Journal of Banking and Financial Services

How Reliable Is Customer Research? Are Bank Customers Deliriously Satisfied or Seething with Resentment? It All Depends on What Research You Read. Elizabeth Duncan Argues the Case for More Rigorous and Transparent Research Methods. (Customer Satisfaction)

Article excerpt

Most companies carry out customer service research in the hope it will give them insights into how their customers tick--and financial institutions are no exception. It is questionable, however, how useful this information really is.

The results often depend on who commissions the research and are often contradictory. For example, the opposing lobby groups the Australian Consumers Association (ACA) and the Australian Bankers Association (ABA) have differing views about the quality of customer service from financial institutions.

The most recent customer satisfaction survey results, carried out by the ACA magazine CHOICE, concluded customer satisfaction was at an all-time low. The survey was based on responses from CHOICE subscribers, in other words ACA members.

The ABA, meanwhile, thought differently. "Despite claims from the, ACA that dissatisfaction levels have worsened, in fact the opposite is true," the ABA said in a media release.

So who do you believe? Customers obviously have their own perspective and that will vary according to a number of factors, such as what bank they use.

So what practical benefit is research to financial institutions? Can they actually use this information to improve service quality and hence customer satisfaction and should they even care?

My concern is twofold. Firstly, there is the matter of conflict of interest. If research is carried out by a party such as a lobby group, the research methodology needs to be made publicly available, or reviewed by an independent expert to ensure that it is statistically credible.

My view is that research which simply presents a satisfaction score is of very little benefit. In terms of designing research, two very basic yet critical factors are frequently overlooked.

The first is identifying the relevant population and secondly, sample selection.

For example, if a bank wanted more information on how satisfied its entire retail customer base was Australiawide, it would be misleading to survey retail customers in one metropolitan area, or a specific segment within the retail customer base, such as Internet banking customers.

Such narrow polling may be convenient, but it is not representative of the defined population and consequently introduces statistical inaccuracies, making the results less reliable.

While there are several acceptable methods of sample selection, it is common for a simple random sample to be selected. This method of selection means that everyone in the specified population has an equal chance of being selected to participate in the survey.

Regardless of whether a bank's retail customer lives in metropolitan Sydney or rural Western Australia, there is an equal chance of them being surveyed.

In terms of data collection methods, there are several options available such as mail, telephone or face to face interviews. Each method has advantages and disadvantages, which are summarised in the table opposite.

Research design is the most critical ingredient in ensuring that research conforms to acceptable standards of rigor.

Prior to designing research, the management of financial institutions need to be clear on what its objectives are and how it wants to use the information.

For example, is it looking for confirmation that a series of recently implemented customer service standard policies have improved customers' perception of the service quality they receive?

Or perhaps more importantly, is the financial institution trying to determine what customers really expect, how likely they are to defect, or how well they are measuring up to customers' expectations?

In my view, customer satisfaction or service quality research is only really valuable when it provides information on the end-to-end customer experience, be it in a face to face situation, telephone banking or internet banking. …

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